Crude oil prices continue to soar

New York's main crude oil contract has soared to a record high in a "feeding frenzy" driven by fear of violence in Iraq or Saudi Arabia.

    Anxieties over Iraq have been pushing up prices

    Benchmark light sweet crude for delivery in June rose 31 cents to $41.08 dollars a barrel, a record high close and just shy of the all-time trading high of $41.15 dollars set in October 1990.

    It was the second successive record closing high.

    In London, Brent North Sea crude for delivery in June rose 54 cents to $38.49 dollars a barrel.

    Petrol in New York leapt 2.7 cents to a new record closing high of $1.4005 dollars for a gallon of regular unleaded.

    "A lot of people are beginning to think that we just lost our grip in Iraq and things are getting a lot worse than we had thought," said Oppenheimer analyst Fadel Gheit.

    The market would likely stay high unless the United States quickly showed it was in control of the situation, he said.

    Gory stories

    "All we see now is gory stories about beheading people and killing and bombing of mosques," Gheit said. "This has to change."

    "A lot of people are beginning to think that we just lost our grip in Iraq and things are getting a lot worse than we had thought"

    Fadel Gheit
    Oppenheimer analyst

    Concerns over supply were heightened after gunmen attacked a Saudi oil facility on 1 May at Yanbu port, killing five employees of the Swiss engineering group ABB and a Saudi national guard soldier.

    "It is a feeding frenzy, it feeds on itself," Gheit said of the market. "There is huge speculative buying right now."

    Based on fundamental supply and demand pressures, the crude oil price should be in the mid 20s, he said. "But I don’t have any hope for oil prices to come to those levels any time soon."

    SOURCE: Agencies


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